Question

On May 1, 2017, Crane Inc. entered into a contract to deliver one of its specialty mowers to Kickapoo Landscaping Co. The contract requires Kickapoo to pay the contract price of $990 in advance on May 15, 2017. Kickapoo pays Crane on May 15, 2017, and Crane delivers the mower (with cost of $648) on May 31, 2017.(a) Prepare the journal entry on May 1, 2017, for Crane. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)(b) Prepare the journal entry on May 15, 2017, for Crane. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)(c) Prepare the journal entry on May 31, 2017, for Crane. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Answer 1

Step-by-step explanation:

The journal entries are shown below:

On May 1, 2017:

No entry as on this date the contract is entered

On May 15, 2017:

Cash A/c Dr $990

To Unearned Revenue A/c $990

(Being advance cash is recorded)

On May 31, 2017:

Unearned Revenue A/c Dr $990

To Sales revenue A/c $990

(Being the revenue is recognized)

On May 31, 2017:

Cost of Good sold A/c Dr $648

To Inventory A/c $648

(Being cost of goods sold is recorded)